{"id":326068,"date":"2024-07-24T11:59:31","date_gmt":"2024-07-24T16:59:31","guid":{"rendered":"https:\/\/www.casino.org\/news\/?p=326068"},"modified":"2024-07-24T12:16:50","modified_gmt":"2024-07-24T17:16:50","slug":"red-rock-slumps-following-earnings-analysts-upbeat-on-durango","status":"publish","type":"post","link":"https:\/\/www.casino.org\/news\/red-rock-slumps-following-earnings-analysts-upbeat-on-durango\/","title":{"rendered":"Red Rock Slumps Following Q2 Earnings, Analysts Upbeat on Durango"},"content":{"rendered":"

Shares of Red Rock Resorts (NASDAQ: RRR) tumbled Wednesday despite solid second-quarter results as some analysts took issue with the stock\u2019s rich valuation.<\/p>\n

\"Durango\"
Durango Casino & Resort in Southwest Las Vegas. The casino hotel was a major contributor to operator Red Rock Resorts’ strong second-quarter results. (Image: Eater Las Vegas)<\/figcaption><\/figure>\n

The regional casino operator reported earnings per share of 59 cents on revenue of $486.4 million for the June quarter. Analysts expected earnings of 43 cents on sales of $475.81 million. Shares of Red Rock, which are lower by 5.82% at this writing, trade close to 11x 2025 earnings before interest, taxes, depreciation, and amortization, sparking concern that the stock might be overvalued at this juncture. It\u2019s up 9.08% over the past month.<\/p>\n

Valuation aside, the company and some analysts remain bullish on the Durango Casino & Resort in Southwest Las Vegas, the operator\u2019s newest property. On Red Rock\u2019s earnings conference call, CFO Stephen Cootey discussed the company\u2019s expansion plans<\/a> at the new venue.<\/p>\n

Our current plans for the next phase of Durango will add over 25,000 square feet of additional casino space, including a new high-limit slot and bar area,\u201d said Cootey. \u201cIn total, the expansion will add to the Durango casino floor an additional 230 slot machines, including 120 slot machines dedicated to our new high-limit room.\u201d<\/p><\/blockquote>\n

The expansion, which will also include nearly 2,000 new parking spots, is in the budgeting and planning stages and could commence later this year, according to the Red Rock chief financial officer.<\/p>\n

Red Rock Stands Out Among Regional Casino Stocks<\/h2>\n

With the benefit of the aforementioned 9.08% gain over the past month, shares of Red Rock are up 9.14%, making it one of the best-performing names in the mostly moribund regional casino space<\/a>.<\/p>\n

\n

That indicates the Las Vegas locals market — Red Rock\u2019s only operating jurisdiction — is proving more vibrant than other regional casino locations and that while Durango is pilfering business<\/a> from the operator\u2019s namesake casino hotel in Summerlin, that situation will shift over time due to the population boom in the Las Vegas Valley.<\/p>\n<\/div>\n

\u201cThere is no doubt about it, RRR remains one of the more compelling stories right now within the lackluster regional gaming,\u201d wrote Stifel analyst Steven Wieczynski in a note to clients. \u201cThe Las Vegas locals market continues to outperform all other regional gaming markets by a wide margin. And with RRR essentially taking market share given their better\/new asset quality, it doesn\u2019t surprise us shares have outperformed regional gaming peers so far year-to-date.\u201d<\/p>\n

While there is some cannibalization between Durango and Red Rock, the revenue from the new property was important to the operator in the second quarter because there were disruptions at Palace Station and Sunset Station that affected traffic at those properties.<\/p>\n

Red Rock Financial Picture Sturdy<\/h2>\n

Red Rock concluded the second quarter with $136.4 million in cash and $3.5 billion in debt, and the operator has a net leverage ratio of 4.3x. Wieczynski said it would be beneficial to see that ratio decline, noting that could be accomplished via real estate sales.<\/p>\n

\n

Red Rock owns all of the land<\/a> on which its casinos reside and when it sells property, it\u2019s never to a gaming company nor does the operator engage in sale-leaseback transactions. Even without real estate sales, the gaming company is turning EBITDA into free cash flow (FCF) at an impressive rate.<\/p>\n<\/div>\n

\u201cWe continue to be impressed at how RRR is managing\/running their business at this point and converting more EBITDA into FCF which has\/should rapidly improve (relatively speaking as their balance sheet is already pretty clean compared to peers) their balance sheet,\u201d concluded Wieczynski. \u201cDurango should deliver returns at or in excess of RRR\u2019s historical average for greenfield projects (~20%), and they noted margins are already run-rating around the portfolio average today and improving every day.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

Shares of Red Rock Resorts (NASDAQ: RRR) tumbled Wednesday despite solid second-quarter results as some analysts took issue with the stock\u2019s rich valuation. The regional casino operator reported earnings per share of 59 cents on revenue of $486.4 million for the June quarter. Analysts expected earnings of 43 cents on sales of $475.81 million. Shares […]<\/p>\n","protected":false},"author":46,"featured_media":323880,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[62,10,81886],"tags":[81897,81903,23],"acf":[],"yoast_head":"\nRed Rock Slumps Following Earnings, Analysts Upbeat on Durango<\/title>\n<meta name=\"description\" content=\"Red Rock Slumps Following Q2 Earnings, Analysts Upbeat on Durango\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.casino.org\/news\/red-rock-slumps-following-earnings-analysts-upbeat-on-durango\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Red Rock Slumps Following Earnings, Analysts Upbeat on Durango\" \/>\n<meta property=\"og:description\" content=\"Red Rock Slumps Following Q2 Earnings, Analysts Upbeat on Durango\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.casino.org\/news\/red-rock-slumps-following-earnings-analysts-upbeat-on-durango\/\" \/>\n<meta property=\"og:site_name\" content=\"Casino.org\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Casino.OrgNews\" \/>\n<meta property=\"article:published_time\" content=\"2024-07-24T16:59:31+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-07-24T17:16:50+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2024\/06\/durango5.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1400\" \/>\n\t<meta property=\"og:image:height\" content=\"788\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Todd Shriber\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@etfgodfather\" \/>\n<meta name=\"twitter:site\" content=\"@Casino_Org\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Todd Shriber\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.casino.org\/news\/red-rock-slumps-following-earnings-analysts-upbeat-on-durango\/\",\"url\":\"https:\/\/www.casino.org\/news\/red-rock-slumps-following-earnings-analysts-upbeat-on-durango\/\",\"name\":\"Red Rock Slumps Following Earnings, Analysts Upbeat on Durango\",\"isPartOf\":{\"@id\":\"https:\/\/www.casino.org\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.casino.org\/news\/red-rock-slumps-following-earnings-analysts-upbeat-on-durango\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.casino.org\/news\/red-rock-slumps-following-earnings-analysts-upbeat-on-durango\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2024\/06\/durango5.jpg\",\"datePublished\":\"2024-07-24T16:59:31+00:00\",\"dateModified\":\"2024-07-24T17:16:50+00:00\",\"author\":{\"@id\":\"https:\/\/www.casino.org\/news\/#\/schema\/person\/f4cecf70a5032bc4e60eb73fc86d4a85\"},\"description\":\"Red Rock Slumps Following Q2 Earnings, Analysts Upbeat on Durango\",\"breadcrumb\":{\"@id\":\"https:\/\/www.casino.org\/news\/red-rock-slumps-following-earnings-analysts-upbeat-on-durango\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.casino.org\/news\/red-rock-slumps-following-earnings-analysts-upbeat-on-durango\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.casino.org\/news\/red-rock-slumps-following-earnings-analysts-upbeat-on-durango\/#primaryimage\",\"url\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2024\/06\/durango5.jpg\",\"contentUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2024\/06\/durango5.jpg\",\"width\":1400,\"height\":788,\"caption\":\"Durango Casino & Resort in Southwest Las Vegas. 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